-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LXCniea9YEshTsEyzY/9s/UT/Ya/YyN8w55AxUPfMNxKGNkJ+WQHdDiht3nlT/6q mI5Xt4rZs7hQYiHsYH9xpw== 0000907098-96-000017.txt : 19960228 0000907098-96-000017.hdr.sgml : 19960228 ACCESSION NUMBER: 0000907098-96-000017 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960226 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN ELECTRONICS CORP CENTRAL INDEX KEY: 0000800286 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 222715444 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16345 FILM NUMBER: 96525422 BUSINESS ADDRESS: STREET 1: 4916 N ROYAL ATLANTA DR CITY: TUCKER STATE: GA ZIP: 30085 BUSINESS PHONE: 7709418962 MAIL ADDRESS: STREET 1: 4916 NORTH ROYAL ATLANTA DRIVE CITY: TUCKER STATE: GA ZIP: 30085 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 14, 1995 SOUTHERN ELECTRONICS CORPORATION (Exact name of registrant as specified in its charter) Delaware 0-16345 22-2715444 State of (Commission File No.) (I.R.S. Employer incorporation) Identification No.) 4916 North Royal Atlanta Drive Tucker, Georgia 30085 (Address of principal executive offices, including zip code) (770) 491-8962 (Registrant's telephone number, including area code) Page 1 of 7. Exhibit Index appears on page 5. Item 2. Acquisition or Disposition of Assets Effective on December 14, 1995, USC Acquisition Corporation, a Delaware corporation ("USC") and wholly-owned subsidiary of Southern Electronics Corporation, a Delaware corporation ("Registrant"), acquired substantially all of the assets and assumed certain liabilities of U. S. Computer of North America, Inc., a Florida corporation ("US Computer"), in exchange for shares of the common stock, par value $.01 per share (the "Common Stock"), of the Registrant, pursuant to an Agreement and Plan of Reorganization dated December 14, 1995 (the "Agreement"), by and among USC, US Computer and David Steiner, a resident of the State of Florida and sole shareholder of US Computer ("Steiner"). US Computer was engaged in the wholesale distribution of certain electronic products to customers located principally in Latin America. The assets transferred to USC consisted primarily of US Computer's cash, accounts receivable, inventory, furniture, fixtures and equipment and other tangible and intangible property (the "Assets") related to its business. USC also agreed to assume certain accounts payable of US Computer related to its business and certain other specifically identified liabilities of US Computer (the "Liabilities"). The aggregate consideration exchanged by USC for the Assets and Liabilities was 175,000 shares of Common Stock, payable as follows: (i) 43,750 shares of Common Stock paid at the closing; (ii) 87,000 shares of Common Stock placed in an escrow account (the "Short Term Stock Escrow") pursuant to a Short Term Stock Escrow Agreement executed December 14, 1995, among US Computer, Steiner, USC and Wachovia National Bank of Georgia, N.A. ("Wachovia"), as escrow agent (the "Short Term Stock Escrow Agreement"), and (iii) 44,250 shares of Common Stock placed in an escrow account (the "Supplemental Stock Escrow") pursuant to a Supplemental Stock Escrow Agreement executed December 14, 1995, among Steiner, USC and Wachovia (the "Supplemental Stock Escrow Agreement"). The consideration was determined through arms-length negotiations between the parties and estimated valuations of the inventory, assets and liabilities of US Computer. Funding for the transaction was provided pursuant to a First Amendment to Revolving Credit Agreement (the "Credit Agreement") among Registrant, USC, Wachovia and National City Bank, Columbus. Pursuant to the Agreement and the Short Term Stock Escrow Agreement, 87,000 shares of Common Stock were placed in the Short Term Stock Escrow to support the indemnity provided by Steiner and US Computer in favor of USC under the Agreement and for certain other matters. Subject to the resolution of any disputes between US Computer, Steiner and USC with respect to the distribution of shares of Common Stock from the Short Term Stock Escrow, up to 67,750 shares of Common Stock will be transferred to the Supplemental Stock Escrow and the balance, if any, will be distributed to Steiner on or about March 13, 1996. Pursuant to the Agreement and the Supplemental Stock Escrow Agreement, 44,250 shares of Common Stock were placed in the Supplemental Stock Escrow which, together with any shares of Common Stock transferred from the Short Term Stock Escrow, will be distributed to Steiner over a period of three years following the closing. The shares of Common Stock held in the Supplemental Stock Escrow will be distributed on or before December 14, 1998. US Computer and Steiner, jointly and severally on the one hand, and USC, on the other hand, agreed to indemnify the other party against certain matters as more fully described in the Agreement. Registrant agreed to guarantee USC's indemnification obligations to US Computer and Steiner subject to certain limitations set forth in the Agreement. Pursuant to an Employment Agreement executed December 14, 1995, between Steiner and USC, Steiner agreed to join USC as its Vice President - Hewlett-Packard Company Exports, with responsibility for sales and marketing of Hewlett-Packard Company products in Latin America. Steiner and USC also have executed a Non-Competition Agreement, dated December 14, 1995, under which Steiner has agreed not to compete with USC, Registrant or their respective affiliates for a specified period following the closing, other than as an employee of USC. In addition to the consideration exchanged by Registrant for the assets and liabilities of US Computer, 100,000 shares of Common Stock and $400,000 were paid to the shareholders of Dinorall Corporation, a Florida corporation (the "Dinorall Shareholders"), in consideration for an option held by the Dinorall Shareholders to purchase all of the issued and outstanding common stock of US Computer. The consideration was determined through arms-length negotiations between the parties. Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired: In accordance with Item 7(a) of Form 8-K, the following financial statements of US Computer prepared in accordance with Regulation S-X are included in this report: * Report of Deloitte & Touche LLP. * Balance Sheet as of December 13, 1995. * Statement of Operations for the period January 1, 1995 through December 13, 1995. * Statement of Changes in Shareholder Deficiency for the period January 1, 1995 through December 13, 1995. * Statement of Cash Flows for the period January 1, 1995 through December 13, 1995. * Notes to Financial Statements. (b) Pro Forma Financial Information. In accordance with Item 7(b) of Form 8-K, the following pro forma financial statements of the Registrant are included in this Report: * Pro Forma Combined Financial Information. * Pro Forma Combined Statement of Operations for the 12- month period ended June 30, 1995. * Pro Forma Combined Statement of Operations for the 6- month period ended December 31, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf of the undersigned hereunto duly authorized. SOUTHERN ELECTRONICS CORPORATION Date: February 26, 1996 By: /s/ Larry G. Ayers Larry G. Ayers Chief Financial Officer, Vice President-Finance, Treasurer and Secretary F-1 INDEX TO FINANCIAL INFORMATION Description Page No. Report of Deloitte & Touche LLP F-2 Balance Sheet as of December 13, 1995 F-3 Statement of Operations for the period January 1, 1995 through December 13, 1995 F-4 Statement of Changes in Shareholder Deficiency for the period January 1, 1995 through December 13, 1995 F-5 Statement of Cash Flows for the period January 1, 1995 through December 13, 1995 F-6 Notes to Financial Statements F-7 Pro Forma Combined Financial Information F-10 Pro Forma Combined Statement of Operations for the 12-month period ended June 30, 1995 F-11 Pro Forma Combined Statement of Operations for the 6-month period ended December 31, 1995 F-12 F-2 INDEPENDENT AUDITORS' REPORT To the Stockholder U.S. Computer of North America, Inc. We have audited the balance sheet of U.S. Computer of North America, Inc. (d/b/a U.S. Computer) (the "Company") as of December 13, 1995 and the related statements of operations, changes in stockholder deficiency, and cash flows for the period January 1, 1995 through December 13, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of December 13, 1995 and the results of its operations and its cash flows for the period January 1, 1995 through December 13, 1995 in conformity with generally accepted accounting principles. Atlanta, Georgia February 12, 1996 F-3 U.S. COMPUTER OF NORTH AMERICA, INC. d/b/a U.S. Computer BALANCE SHEET DECEMBER 13, 1995 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,313,231 Accounts receivable, less allowance for doubtful accounts of $500,000 4,163,255 Inventory 972,841 Prepaid expenses and other current assets 20,568 Total current assets 6,469,895 PROPERTY AND EQUIPMENT - Net 117,499 $ 6,587,394 LIABILITIES AND STOCKHOLDER DEFICIENCY CURRENT LIABILITIES: Accounts payable $10,790,449 Accrued liabilities 144,658 Obligations under capitalized leases 15,799 Note payable - stockholder 144,509 Total current liabilities 11,095,415 LONG-TERM OBLIGATIONS UNDER CAPITALIZED LEASES 11,501 COMMITMENTS AND CONTINGENCIES STOCKHOLDER DEFICIENCY: Common stock, $1 per value; 5,000 shares authorized; 100 shares issued and outstanding 100 Additional paid-in capital 560,000 Accumulated deficit (5,079,622) Total stockholder deficiency (4,519,522) $ 6,587,394 See notes to financial statements. F-4 U.S. COMPUTER OF NORTH AMERICA, INC. d/b/a U.S. Computer STATEMENT OF OPERATIONS PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995 NET SALES $53,873,882 COST OF SALES 50,907,386 Gross margin 2,966,496 OPERATING EXPENSES: Salaries and benefits 936,088 Provision for bad debts 173,340 Other 611,242 Total operating expenses 1,720,670 INCOME FROM OPERATIONS 1,245,826 OTHER (INCOME) EXPENSE: Interest expense, net 52,706 Other (28,104) Total other (income) expense 24,602 NET INCOME $ 1,221,224 See notes to financial statements. F-5 U.S. COMPUTER OF NORTH AMERICA, INC. d/b/a U.S. Computer STATEMENT OF CHANGES IN STOCKHOLDER DEFICIENCY PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995 Common Additional Stock Paid-in Accumulated Stockholder $1 Par Value Capital Deficit Deficiency BALANCE, JANUARY 1, 1995 $ 100 $ 560,000 $(6,300,846) $(5,740,746) Net income 1,221,224 1,221,224 BALANCE, DECEMBER 13, 1995 $ 100 $ 560,000 $(5,079,622) $(4,519,522) See notes to financial statements.
F-6 U.S. COMPUTER OF NORTH AMERICA, INC. d/b/a U.S. Computer STATEMENT OF CASH FLOWS PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995 OPERATING ACTIVITIES: Net income $ 1,221,224 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 60,000 Provision for bad debts 173,340 Gain on disposals of equipment (8,500) Changes in assets and liabilities: Accounts receivables (1,812,035) Inventory 1,518,879 Prepaids and other assets 22,577 Accounts payable and accrued expenses 771,065 Total adjustments 725,326 Net cash provided by operating activities 1,946,550 INVESTING ACTIVITIES: Capital expenditures (11,704) Proceeds from disposals of equipment 15,148 Net cash provided by investing activities 3,444 FINANCING ACTIVITIES: Repayments to stockholder (231,093) Repayment on note payable - other (938,326) Repayments on capitalized lease obligations (19,200) Net cash used in financial activities (1,188,619) NET INCREASE IN CASH AND CASH EQUIVALENTS 761,375 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 551,856 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,313,231 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 58,607 See notes to financial statements. F-7 U.S. COMPUTER OF NORTH AMERICA, INC. d/b/a U.S. Computer NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 13, 1995 AND THE PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995 1. NATURE OF BUSINESS AND DISPOSITION Business Activity - U.S. Computer of North America, Inc. d/b/a U.S. Computer (the "Company") is engaged in wholesaling and exporting computer hardware, software, and peripherals, through facilities located in Miami, Florida, to computer retailers located primarily in Latin America. The Company normally operates through distributorship agreements with major vendors which are renewable generally on an annual basis. On December 14, 1995, USC Acquisition Corporation, a wholly owned subsidiary of Southern Electronics Corporation ("SEC"), acquired substantially all of the assets and assumed certain liabilities of the Company. The accompanying financial statements are presented on the historical cost basis and do not include any adjustments arising from this transaction. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - Revenues from the sale of the Company's products are recognized at the time of shipment. The Company generally only accepts returns for damaged products. Actual returns have not been significant. Cash and Cash Equivalents - The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Inventory - Inventory is valued at the lower of first-in, first-out (FIFO) cost or market. Property and Equipment - Property and equipment is recorded at cost. Property and equipment under capital leases is stated at the present value of minimum lease payments at the inception of the lease. Depreciation is determined using straight-line and accelerated methods, at various rates based generally on the estimated useful lives of the assets ranging from 5 to 6 years. Amortization of leasehold improvements and property and equipment under capital leases is computed on a straight-line basis over the shorter of the estimated useful lives or the term of the lease. Income Taxes - The Company is not subject to corporate income taxes as the corporation has elected, with the shareholder's consent, to be taxed under S Corporation provisions of the Internal Revenue Code and, accordingly, no provision has been made for federal and state income taxes in the accompanying financial statements. Under this provision, taxable income of the Company is reflected on the stockholder's personal income tax return. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F-8 3. PROPERTY AND EQUIPMENT Property and equipment at December 13, 1995 consisted of the following: Furniture and fixtures $ 28,860 Machinery and equipment 203,903 Leasehold improvements 124,842 Equipment under capitalized lease arrangements 35,458 393,063 Less accumulated depreciation and amortization 275,564 $ 117,499 Depreciation and amortization expense for the period January 1, 1995 through December 13, 1995 was $60,000. 4. LEASES The Company leases certain equipment under capitalized leases through 1997. The Company also leases warehouse, office facilities, and certain equipment under operating leases through 1999. The following represents the future minimum lease payments under capitalized and operating leases as of December 13, 1995: CAPITAL OPERATING LEASES LEASES Through December 31, 1995 $ 1,944 $ 1,081 1996 23,227 95,535 1997 5,329 12,975 1998 6,615 1999 891 Total minimum lease payments 30,500 117,097 Less amount representing interest 3,200 Present value of future minimum lease payments $ 27,300 $ 117,097 Rent expense under operating leases was $99,879 for the period January 1, 1995 through December 13, 1995. 5. NOTES PAYABLE The note payable to stockholder bears interest at prime plus 2%, is unsecured, and is due on demand. Subsequent to December 13, 1995, the note payable was repaid. Interest expense on the note for the period January 1, 1995 through December 13, 1995 was $26,088. F-9 At December 31, 1994, the Company had a note payable with an outstanding balance of $938,326 which represented an amount due to a relative of the Company's stockholder. The note bore interest at prime plus 2% or 10%, whichever was greater, was unsecured, and was due on demand. During 1995, the note payable was satisfied in full. Interest expense on this note for the period January 1, 1995 through December 13, 1995 was $23,242. 6. SIGNIFICANT VENDOR During the period January 1, 1995 through December 13, 1995, approximately 98% of the Company's product purchases were from one vendor. Accounts payable to such vendor at December 13, 1995 was approximately $10,662,000. Substantially all accounts receivable and inventory are pledged as collateral against accounts payable to this vendor. F-10 PRO FORMA COMBINED FINANCIAL INFORMATION The following unaudited pro forma combined statements of operations for the Company for the year ended June 30, 1995 and six months ended December 31, 1995, give effect to the December 14, 1995 acquisition of U.S. Computer as if such acquisition had occurred on July 1, 1994. The pro forma combined financial information is derived from and should be read in conjunction with the historical financial statements of U.S. Computer and the related notes thereto appearing elsewhere in this Current Report, and the Company's Annual Report on Form 10-K for the year ended June 30, 1995 and Quarterly Report on Form 10-Q for the quarter ended December 31, 1995 previously filed with the Securities and Exchange Commission. The pro forma information is not necessarily indicative of the results that would have been reported had such acquisition occurred at the pro forma date specified, nor is it necessarily indicative of the Company's future results. F-11 SOUTHERN ELECTRONICS CORPORATION PRO FORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 1995 (In Thousands, Except Per Share Data) Pro Southern Forma Pro Forma Electronics U.S. Computer Adjustments Combined NET SALES $ 398,753 $ 50,666 $ 449,419 COST OF GOODS SOLD 370,548 48,051 418,599 GROSS PROFIT 28,205 2,615 30,820 OPERATING EXPENSES: Selling, general, and administrative 18,640 5,470 $ (198) 1 23,912 Special charge 452 Amortization of intangibles 12 250 2 262 TOTAL OPERATING EXPENSES 19,104 5,470 52 24,626 INCOME (LOSS) FROM OPERATIONS 9,101 (2,855) (52) 6,194 NET INTEREST EXPENSE 688 179 867 INCOME (LOSS) BEFORE TAXES 8,413 (3,034) (52) 5,327 INCOME TAXES 3,191 (1,091) 3 2,100 NET INCOME (LOSS) $ 5,222 $ (3,034) $ 1,039 $ 3,227 INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.74 $ 0.44 WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 7,069 7,344 1 Reflects the elimination of salaries and benefits paid to employees of U. S. Computer who will be terminated and not replaced. 2 Adjusts for the amortization of intangible assets, consisting of goodwill and a noncompete agreement, with useful lives of 30 and 5 years, respectively. 3 Adjusts income tax expense to reflect the pro forma effect on income tax expense resulting from the acquisition of U.S. Computer (an S Corporation for income tax purposes). F-12
SOUTHERN ELECTRONICS CORPORATION PRO FORMA COMBINED STATEMENT OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 1995 (In Thousands, Except Per Share Data) Pro Southern Forma Pro Forma Electronics U.S. Computer Adjustments Combined NET SALES $ 211,858 $ 25,929 $ 237,787 COST OF GOODS SOLD 198,391 24,638 223,029 GROSS PROFIT 13,467 1,291 14,758 OPERATING EXPENSES: Selling, general, and administrative 9,202 735 $(108) 1 9,829 Amortization of intangibles 19 114 2 133 TOTAL OPERATING EXPENSES 9.221 735 6 9,962 INCOME (LOSS) FROM OPERATIONS 4,246 556 (6) 4,796 NET INTEREST EXPENSE 423 11 434 INCOME (LOSS) BEFORE TAXES 3,823 545 (6) 4,362 INCOME TAXES 1,459 261 3 1,720 NET INCOME (LOSS) $ 2,364 $ 545 $(267) $ 2,642 NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.33 $ 0.36 WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 7,103 7,378 1 Reflects the elimination of salaries and benefits paid to employees of U.S. Computer who were be terminated and not replaced. 2 Adjusts for the amortization of intangible assets, consisting of goodwill and a noncompete agreement, with useful lives of 30 and 5 years, respectively. 3 Adjusts income tax expense to reflect the pro forma effect on income tax expense resulting from the acquisition of U.S. Computer (an S Corporation for income tax purposes).
-----END PRIVACY-ENHANCED MESSAGE-----